1. A payout ratio measures the percentage of a firms Net income which is returned to shareholders (primarily through dividends). If a firm has $10 million in net income, has 1,500,000 shares outstanding and declares dividends of $4 per share, what is the payout ratio?

Payout Ratio = Total Dividend Payout/Net Income

1. 0.7
2. 0.50
3. 0.60
4. 0.66